No Appraisal Required Under New HARP

Today the Federal Housing Finance Agency (FHFA) announced changes to the Home Affordable Refinance Program (HARP) to “attract more eligible borrowers who can benefit from refinancing their home mortgage.” The announcement was made in conjunction with the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac. HARP will now allow borrowers to refinance even if they are underwater. According to the Wall Street Journal, only 894,000 borrowers have used HARP, of which 70,000 were underwater.

FHFA announced several enhancements to HARP, including eliminating the appraisal requirement.

The appraisal is no longer required if a reliable automated valuation model (AVM) estimate can be provided by the GSEs.

Other enhancements include:

1. Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
2. Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
3. Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac; and
4. Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.